The Star Entertainment decision of the Federal Court provides important lessons for officers and non-executive directors. In particular, it re-iterates the importance of directors bringing an inquiring mind to their role, and engaging in active oversight of the organisation’s risk management and culture.
In the recent decision of Australian Securities and Investments Commission v Bekier (Liability Judgment) [2026] FCA 196, the Federal Court (Justice Lee) found that two former senior executives of The Star Entertainment Group Ltd (Star) breached their duty of care and diligence under section 180 of the Corporations Act 2001 (Cth) in relation to their handling of the risks associated with money laundering and criminal activity at one of Australia’s major casinos.
ASIC commenced proceedings in December 2022 against 11 current and former directors and officers of Star, each alleged to have contravened their statutory duty of care and diligence. The Court, which handed down its decision on 5 March 2026, ultimately found that only 2 defendants, Star’s former CEO & Managing Director, and General Counsel (who was also the Chief Legal and Risk Officer and the Company Secretary), had contravened their duty.
The claims against the non-executive directors were dismissed.[1] Nevertheless, there are key takeaways for non-executive directors from this decision. In his recent keynote address at the AICD Australian Governance Summit, ASIC Chair Joe Longo made it clear that nothing in the Star judgment changes ASIC’s appetite to hold corporate leaders to account for their governance failures, and promised that the regulator will continue to pursue cases where it can define the line of responsibility for directors.
The Court’s key findings in relation to:
| CEO |
|
| General Counsel |
|
| Non-executive directors |
|
Key takeaways
Duty of care and diligence is applied rigorously, but in context
The Court reaffirmed that the duty of care and diligence is unchanged, but its application can be contextual. In companies that operate high-risk businesses or in heavily regulated industries (such as the Star which was exposed to significant AML/CTF risk), the expectations on directors’ oversight can be more exacting.
Directors need to acquire a clear understanding of the risks that their companies are exposed to, and determine where the most significant risks are which require greater attention.
Directors cannot just “set and forget” but need to actively monitor risks
Directors must actively monitor how the key risks of the organisation are being managed, and cannot treat them as mere compliance issues for management.
Indeed, the Board Charters of most companies will identify that a key responsibility of the Board includes setting the risk culture of the organisation, and monitoring the effectiveness of risk management within the organisation. As the Court noted, if Boards adopt these statements, it is presumed that they are supposed to be more than platitudes.[2]
The role of directors is not a passive one
While directors are entitled to rely on the judgment, information and advice of management, the role of directors is not a passive one. They are expected to actively engage, take a diligent and intelligent interest in the information available to them, understand that information, and apply an enquiring mind to their responsibilities.[3]
Passive acceptance of management assurances is not sufficient, particularly where there are red flags or any warning signs. Directors must have a willingness to interrogate, probe and, where necessary, challenge the information that is presented to them.[4]
Boards should control information flows
A key aspect of this case related to the adequacy of reporting lines and information flows.
In relation to the CEO, the Court noted that his responsibilities required him to act as a key conduit between the Board and executive management, and to take all reasonable steps to ensure that the Board was informed of key matters exposing Star to legal, financial or reputational risk.
However, this does not mean that management should increase the volume of information that is provided to directors. The risks of subjecting Boards to voluminous board packs were made clear by the Court in this decision – where a board pack contains multiple sections (such as summaries, followed by detailed papers, followed by appendices and attachments), while each section is defensible and in isolation apparently sensible, taken together, they are oppressive.[5]
Boards should give clear direction to management about their expectations in relation to the content and format of board papers, which should be both comprehensive and capable of digestion.[6] Management should aim to provide clarity and insight, rather than giving into temptation to include more as insurance against criticism.
As pointed out by Justice Lee (and emphasised by the ASIC Chair in his recent speech at the AICD Australian Governance Summit), directors cannot rely upon an inability to cope with the volume of information they receive as an excuse for not meeting directors’ duties.
AI is not a substitute for careful reading and interrogation
The Court raised that the usage of artificial intelligence (AI) by Australian boards is becoming more common to assist directors in discharging their duties, and by management in the creation of board packs. Whilst there is considerable potential for AI to assist in these situations, Justice Lee noted that AI should not be a substitute for careful reading and the interrogation of board materials.
The Court highlighted that all directors are required to take reasonable steps to place themselves in a position to guide and monitor the management of the company, and are expected to take a diligent and intelligent interest in the information available to them, understand that information, and apply an enquiring mind to their responsibilities. It is the responsibility of the directors to ensure that if they are to use AI, they do so in a responsible and appropriate manner, as ultimately, ethical reasoning and judgment rests with directors, not machines.[7]
1 Two other executives, the former Chief Casino Officer and the former CFO, settled their case earlier in 2025
2 Australian Securities and Investments Commission v Bekier (Liability Judgment) [2026] FCA 196 [1952].
3 Ibid [1945].
4 Ibid.
5 Ibid [384].
6 Ibid [393].
7 Ibid [394].